There are several sources providing forecasting data on the state of the commercial building and construction industry. One of the best-known is the American Institute of Architects, which publishes a consensus construction forecast twice a year. Learn more about its outlook, along with insights from some of the other leading construction industry prognosticators, some of whom are part of the AIA’s aggregate data.
The Next 18 Months Show Promise
Here’s a look at each segment, ranked by their expected growth in 2024 and into 2025, along with an extended five-year forecast view and insight.
Public Safety
Opportunities: Shifting populations drive the need for new public safety facilities in growing metro and suburban markets. Building consolidation in declining-population markets also drives new construction or the rehabbing of existing facilities.
Challenges: Governmental decision-making and fund approval cause delays on projects while construction costs continue to rise, creating the need to adjust and account for additional investments.
Industrial and Manufacturing
Opportunities: Emerging technology and the transitional economy are creating opportunities in the manufacturing of semi-conductor chips, clean energy, electric vehicle vehicles, batteries and recharging infrastructure.
Challenges: Beyond government-sponsored domestic manufacturing initiatives, growth in U.S. manufacturing output is still challenged by global competitive pressures.
Religious
Opportunities: Construction activity for 2024 shows promise, likely due to significant population shifts to southwestern and southern markets, fueling new community growth. Underutilized churches are getting creative in renovating portions of their facilities to help with the housing crisis in some metro areas.
Challenges: Regular attendance of religious services continues to decline as U.S. consumer values shift with the millennial and Gen Z generations.
Amusement and Recreation
Opportunities: Post-pandemic, the demand for entertainment, sports and recreation has been strong, leading to investments in all forms of facility development.
Challenges: Economic uncertainty with persistent inflation, high interest rates and recession fears may stunt future growth patterns, but the five-year outlook remains solid.
Education
Opportunities: Demand for student housing is high for colleges and universities, as colleges typically only plan for 25-35 percent of mainly underclass students living on campus, while nearby off-campus rates are rising to unaffordable levels. For K-12 facility development, health, wellness, air quality, and net-zero energy goals are the trend.
Challenges: Economic uncertainty with persistent inflation, high interest rates and recession fears may stunt future growth patterns, but the five-year outlook remains solid.
Health
Opportunities: Growth in outpatient care in suburban, non-hospital campus settings is driven by aging populations looking for easier access, overall convenience without sacrificing quality, and the availability of technology and specialists.
Challenges: Rising construction costs remove some predictability in planned capital projects, leading to construction delays and renewed funding efforts for health care organizations already working with tight operating margins.
Office
Opportunities: Office construction in suburbs is a good comprise to build affordable, convenient spaces to motivate more in-office requirements. The combination of new Class A suburban space and renovated older buildings in urban and older suburbs with attractive amenities and a welcoming experience will drive demand in the near-term.
Challenges: The pandemic created a paradigm shift in attitudes toward work. Working from home is an expectation for professionals, at least as a hybrid model. Metro-area, downtown office spaces must re-imagine use around being livable entertainment hubs. Outside of the major handful of metro areas, high-rise conversions are costly. Plus, is there sufficient demand for people to live in downtown areas if their jobs don’t require them to be there?
Hotel and Lodging
Opportunities: Prefab construction helps reduce costs and shortens timelines while requiring less reliance on an already overextended construction labor force. Automation technology reduces reliance on hospitality staffing while improving the overall stay experience, personalizing it for the guest.
Challenges: Inflation-driven price increases to rooms and travel, unreliable airline performance and weakening economic data put pressure on demanding momentum moving forward.
Retail and Other Commercial
Opportunities: The migration of population to states like Texas, Florida and Idaho presents opportunities in those growing geographies to foster both residential and commercial development, including retail.
Challenges: Mixed-use development, including multifamily components, may experience contracting demand due to stricter bank-lending policies and continued high borrowing costs.
